Background Paper of Finland for Oecd Short-Term Economic Statistics Expert Group June 2002

STD/STESEG(2002)15

Background paper of Finland for OECD ShortTerm Economic Statistics Expert Group June 2002

This paper concentrates on some of the shortterm indicators which are defined by the Council regulation (EC) No 1165/98 concerning shortterm statistics Finland is fulfilling all the requirements of the shortterm statistics regulation.

Special attention is paid on the indicator of industrial production where Finland is the fastest one in the EC, the turnover indicator where the service sectors are well covered and the indicator on wages and salaries where all sectors excluding agriculture, forestry, and fishing are included.

Production for industry

The volume index for industry is published monthly 30 days after the end of the reference month. It is the fastest in the European Union. The results are published on about 40 activities which roughly equals the 3digit level.

The data is based on a sample of 1300 establishments. The sample is stratified on the 5digit level of the activity classification. The 5digitlevel is a national modification of the NACE rev. 1. Basically all the biggest establishments measured by the gross value of the production are in the sample but there are some smaller ones as well. The coverage of the sample is about 80 percent of the gross value. It varies from 40 to 100 per cent on the 2digit level of NACE.

The frame population is the register of establishments of structural business statistics. There are about 5500 establishments in the frame population. Each establishment has over 20 employees.

The secret of the fast production schedule is an insistent data collection. The mail questionnaire is due on the 15th day after the reference month. Reminders are sent on the next day. The data collection is completed by phoning about 100 establishments. Phone calls are made several times if necessary. The number of nonrespondents is usually about a dozen or less out of 1300. The calculation starts no later than two working days before the publication which is the last working day of the month following the reference month.

Information is collected about the produced quantity of the most important commodity or commodities of each of the establishment. If there is no exact product a substitute (for example energy, use of raw materials, hours worked) is used. Even the use of a production value is possible. They are deflated by using an appropriate price index.

The monthly volume index is calculated as a weighted arithmetic average of the production. The weights are from our own survey or from the structural statistics. Establishments monthly production quantity (or other data) is divided by the average of the last year and multiplied by the weight of the item in question. The volume index is calculated for every establishment. The indices of each establishment are weighted by gross value to form the most detailed level of activity class indices. After that the detailed activity indices are weighted by value added of the activities to form indices for higher levels of activities. The weights change yearly (chain index). The preliminary weights are taken from the newest year where the annual data is available.

SAS software is used in the calculation. X12ARIMA is used in the seasonal adjustment. The base year is 2000 (2000=100).

Especially those activities where the coverage is not so high are subject to adjustment. The annual structural statistics is used in the adjustment of the monthly indices. The yearonyear difference between structural statistics and volume index at the total industry level is usually +/1 percent unit.

The changes in the quality of the products may cause bias to the results. It is the next challenge in the future.

Turnover indicator for industry, construction, trade, and other services

The turnover index is produced monthly for the following sectors:

industry with 29 subgroups (the 2digit level of NACE rev.1)

construction with 2 subgroups (building construction, civil engineering)

retail trade with 19 subgroups

other trade with 2 subgroups in sale of cars etc. and 7 subgroups for wholesale

other services: 4 main activities which have 22 subgroups (some of them are not required by the STS regulation)

The most important data source is the value added tax data (VAT). One of the advantages of using administrative data is that it covers all the enterprises which are subject to value added taxation. The most important exceptions are certain sectors like banking and insurance and small enterprises whose annual turnover is less than EUR 8.500.

The variable is the turnover excluding vat. It is not exactly the same as in the financial statements. For example differences are caused by selling of some of the fixed assets. The domestic turnover is used in construction. In the industry turnover is not the only variable. The other variables are domestic turnover and nondomestic turnover (export). Moreover, the export is divided into export to EC countries and nonEC countries. Note that the purpose of shortterm indicators is to depict change, not levels of turnover. As long as the variable we use correlates with turnover properly differences in detailed definitions are not a problem.

The data is available for us approximately 2 months after the end of the reference month. One of the disadvantages of the VAT data is that it is not complete when we get it for the first time. From our point of view, the data is revised for a period of six months. On other words we get basically the same data six times but enterprises have made some changes and there are more enterprises involved. The first data with the 2 month delay covers about 70 per cent of the enterprises and 80 per cent of the turnover.

In addition to the VAT data, we use some direct data collection. The enquiry is made to the biggest enterprises of each activity class. The sample covers usually 25100 per cent of the turnover of the activity class. There is no exact size cutoff but depends on the size of the enterprises in relation to the activity class. The timetable of the direct data collection is faster than the VAT. The deadline for the questionnaire is the 22nd day after the reference month.

The direct data collection is done by using a mail questionnaire. The answers come by fax (about 75 %) or by mail. The data collection via internet is under construction.

The reporting unit is the enterprise (legal unit) although some of the companies with diversified activities are divided by the activity.

The calculation is based on a panel method that uses information from the enterprises that have data on a reference month and on the same month the year before. The first step is to calculate yearonyear changes for every subgroup. The index is calculated by multiplying indices on the year before by these changes.

New enterprises as well as the enterprises which have closed down are taken into account in other services. That part of the calculation procedure still needs some work but it will be taken into use in other activities as well.

For the time being the weights are based on the 1995 VAT tax records and they stay constant.

The volume indices are calculated for the trade only. The price indices are based on the products or product groups of each of the activities.

The series are seasonally adjusted by using X11ARIMA. The SAS software is used in the adjusting as well as in the calculation.

The results are published 8085 days after the end of the reference month. For trade the preliminary results are published in about 52 days delay. Four press releases (industry, construction, trade, other services) are made monthly. The only publication media is Internet except for trade which still has a paper publication. The internet address is , but unfortunately it is all in Finnish.

In the beginning of 2003 we will change the base year from 1995 to 2000. Simultaneously we take into account the changes which are caused by the NACE revision. The new and closed down enterprises will probably be calculated for all activities from then on.

In addition to the requirements of the regulation quarterly turnover indices are compiled for the production of national accounts. The delay is 50 days. The part of the indices which concerns the latest month is based on the survey of the big enterprises but it is complemented by model based estimation on some sectors.

Wages and salaries indicator

The wages and salaries index is produced monthly for all the sectors and activities excluding agriculture, forestry, and fishing. The delay is less than two months.

The most important data source is the employer’s payments return. It is administrative data which is collected by tax authorities. The schedule is rather good and the data is available to us about 1 month after the end of the reference month. The data covers all so called regular wage payers meaning that the employers have two or more regular employees or simultaneously at least six employees.

The data behaves like VAT data. It is not complete when we get it for the first time and it is revised monthly five times afterwards. On other words we get basically the same data six times but employers have made some changes and there are more employers involved.

The reporting unit is the legal unit although some of the companies with diversified activities are divided by the activity. Information for the divided enterprises are collected directly. There are about 100 such units.

The calculation method is basically the some for both turnover and wages and salaries. It is based on a panel method that uses information from the employers that have data on a reference month and on the same month the year before. The first step is to calculate yearonyear changes for every subgroup. The index is calculated by multiplying indices on the year before by these changes.

New enterprises as well as the enterprises which have closed down are taken into account in other services, public administration, education, and health and social services.

The series are seasonally adjusted by using X11ARIMA. The SAS software is used in the adjusting as well as in the calculation.

The results are published about 55 days after the end of the reference month on a monthly press release and via Internet. The internet address is the same as for the turnover.

The future evolution is the same as for the turnover indicator.

New orders received for industry

A leading indicator is compiled instead of the new orders received. The data is collected by The Confederation of Finnish Industry and Employers ( They use it as a confidence indicator. The answers are collected from about 500 chief executive officers.

Models are used in the estimation. Weights are from the structural statistics. The result is monthly indices. The series correspond the variables mentioned in the regulation being new orders received, domestic new orders, and nondomestic new orders. They are only delivered to Eurostat, and not published in Finland.

Building permits

The publication contains information about the number of building permits, floor area, size (in m3), number and size of residences and the classification of buildings. The statistics is published monthly with about two months delay.

The target population consists of all the new buildings and enlargements of the existing buildings which require building permit. Renovations are not included.

The building permits statistics is based on an administrative data. It is collected by the building inspection officials and transmitted to the population register centre. The data content is more than adequate for the statistical purposes.

The data of the newest months is preliminary. The data is complete by the time the final building permits statistics is compiled. It is done once a year six months after the end of the reference year.

Quarterly construction statistics

Quarterly published construction statistics are based on the same administrative data as building permits. The indicators are quarterly since the year 2000. There are a lot of variables, for example number of building permits, number of started/unfinished/finished buildings, the size in m2, the size in m3, and number of houses. The publication delay is about two months. It is final six months after the change of the year in question due to the changes and complements in the data.

Production of construction

Volume indices are calculated separately for building construction and civil engineering. Production of construction is obtained by weighting together the indices of building construction and civil engineering. The applicable weights are the value added shares from the national accounts of the base year (1995).

The indicator for construction production is produced quarterly with a three months delay. The data and population are the same as in the turnover indicator. The variable is domestic turnover.

The civil engineering value index is deflated by civil engineering cost index. The value index of building construction is deflated by the implicit price index of Statistics Finland’s volume index of new building construction.

Inventories for industry and trade

Inventory statistics are produced quarterly for industry and trade. The variable is value of the inventory in current prices. In the questionnaire inventory is divided into materials and supply, fuel and lubricants, work in progress, final products and mercantile commodities.

The data is a sample of the biggest enterprises. The weighting is based on the assumption that the relation between turnover and value of the inventories is constant within an activity. The publication delay is 50days. Inventories for industry is published in the internet but the stocks for trade used, for the time being, only for national accounting.